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Is your investment cost-efficient?

It is important to know the cost of acquiring and maintaining any asset class, as it can have an adverse impact on returns

Joydeep Ghosh & Tinesh Bhasin  |  Mumbai 

You have to choose between two equity mutual fund (MF) schemes. One has an expense ratio of three per cent and has given a return of 20 per cent in the past year. The other fund has an expense of two per cent and returned 18 per cent. If both funds have similar track records and pedigree, most investment advisors would prefer the former, despite a higher expense ratio of 100 basis points (bps), because of better returns. And, cost of investment becomes secondary. On the other hand, if there are two Nifty-based exchange-traded funds (ETFs), one charging one per cent and the other two per ...

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Is your investment cost-efficient?

It is important to know the cost of acquiring and maintaining any asset class, as it can have an adverse impact on returns

It is important to know the cost of acquiring and maintaining any asset class, as it can have an adverse impact on returns You have to choose between two equity mutual fund (MF) schemes. One has an expense ratio of three per cent and has given a return of 20 per cent in the past year. The other fund has an expense of two per cent and returned 18 per cent. If both funds have similar track records and pedigree, most investment advisors would prefer the former, despite a higher expense ratio of 100 basis points (bps), because of better returns. And, cost of investment becomes secondary. On the other hand, if there are two Nifty-based exchange-traded funds (ETFs), one charging one per cent and the other two per ... image
Business Standard
177 22

Is your investment cost-efficient?

It is important to know the cost of acquiring and maintaining any asset class, as it can have an adverse impact on returns

You have to choose between two equity mutual fund (MF) schemes. One has an expense ratio of three per cent and has given a return of 20 per cent in the past year. The other fund has an expense of two per cent and returned 18 per cent. If both funds have similar track records and pedigree, most investment advisors would prefer the former, despite a higher expense ratio of 100 basis points (bps), because of better returns. And, cost of investment becomes secondary. On the other hand, if there are two Nifty-based exchange-traded funds (ETFs), one charging one per cent and the other two per ...

image
Business Standard
177 22